Friday, October 30, 2009

Mexico's a Better Bet?

It might not surprise you that the Mexican stock market, as measured by the exchange traded fund tracking the Mexican market (EWW). After all, Mexico is still considered a developing economy where stronger growth is expected. Many of us know however that Mexico's troubles are probably worse that those of the US so one might shun investing there.
I always operated under the assumption that those in Mexico would be better off changing their pesos to dollars and investing in the US. The Mexican Peso dropped some 30% against the dollar last year and with this in mind, I thought that it would be a "no-brainer" for Mexicans to keep their money up here. But surprise surprise!

Over the past three years, holding Mexican Pesos has proven to be a better strategy than investing in the SP500! Not only that, but peso accounts generally pay a much greater rate of interest than dollar investments. The Mexican Peso Exchange Traded Fund (FXM) currently offers a 3.5% dividend.
Who could have guessed???

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